Q: How can one company be considered a joint employer of another company’s employees?

A: The Opinions of several courts and related Regulations determine the answer. Different agencies and states may apply different definitions of joint employer under the applicable laws they are responsible for enforcing.

On March 3, 2023, the Fort Worth, Texas, Regional Director of the National Labor Relations Board (Board) issued a decision determining that Cognizant Technology Solutions US (Cognizant) and Google LLC (Google) were joint employers, and that the petition by Alphabet Workers Union (informally referred to as the “Google Union,” Alphabet Workers Union is a trade union of workers employed at Alphabet Inc., Google's parent company) to represent certain Cognizant employees was granted. Although the petitioned-for unit determination is important for Labor Law practitioners, the Board’s analysis of factors related to joint-employment status should be noted by Employment Law practitioners counseling employers nationwide.  

The Board’s finding was based on its joint-employer rule, which states that “an employer … may be considered a joint employer of a separate employer’s employees only if the two employers share or codetermine the employees’ essential terms and conditions of employment.” 29 C.F.R. § 103.40. To establish this, the employer “must possess and exercise such substantial direct and immediate control over one of more essential terms of conditions of their employment.” Id.

“[Essential] terms and conditions of employment” are “wages, benefits, hours of work, hiring, discharge, discipline, supervision and direction.” Id. The actions must have a regular or continuous consequential effect on an essential term or condition of employment. 29 C.F.R. § 103.40(d). The Board relied on Walter B. Cooke Inc., 262 NLRB 626 (1982): “A joint-employer relationship therefore exists where one employer, while contracting in good faith with another otherwise independent company, has retained for itself sufficient control of the terms and conditions of employment of the employees who are employed by the other employer.” The standard is one of the “totality of the circumstances.” 29 C.F.R. § 103.40(d).

As noted in the opinion, Google contracted with Cognizant to support its YouTube Music Content Operations. The Board found that Google and Cognizant were joint employers and based its opinion on the following information in the record:

• Google required that Cognizant offer more benefits to the employees at issue than it offered to its own employees
  
  
• Google expected the employees to be available from 8:00 a.m. to 5:00 p.m.
  
  
• Google may ask the employees to work overtime
  
  
• Google set the employees’ holiday schedule
  
  
• Google created training documents for the employees at issue
  
  
• Google tracks and audits the employees’ performance
  
  
• Google sets the rate at which workflows must be completed
  
  
• Google sets the priority level and time limits for the employees to complete projects.

The Board considered that although Google maintained some control over the employees’ wages, this was viewed as a neutral factor.

In California, the question of whether one company is the joint employer of an employee employed by another entity begins with an analysis of Industrial Welfare Commission wage orders. Wage Order No. 7 defines:

• Employer” as a person or business “who directly or indirectly, or through an agent or any other person, employs or exercises control over the wages, hours, or working conditions of any person.”
  
  
• An “Employee” is defined as “any person employed by an employer.”
  
  
• “Employ” as to “engage, suffer, or permit to work.”
  Code Regs., tit. 8, § 11070, subds. 2(F), 2(E), 2(D).

The California Supreme Court held that “to employ” could fall within three categories: “(a) to exercise control over the wages, hours, or working conditions, or (b) to suffer or permit to work, or (c) to engage.” Martinez v. Combs (2010) 49 Cal.4th 35, 64. 

Applying these factors, echoing factors relied on by the NLRB in the Google decision, the Curry v. Equilon Enterprises, LLC court determined that Shell was not the joint employer with ARS, because:

• ARS was responsible for hiring, firing, disciplining, training, and compensating its employees
  
  
• ARS was responsible for the hours the employee worked and the wage she received
  
  
• ARS determined when the employee could take personal time off from work
  
  
• ARS determined employee’s vacation and make-up work
  
  
• Shell could not direct the employee to perform a particular task
  
  
• ARS exercised control over the employee’s daily work.
  Curry v. Equilon Enterprises, LLC (2018) 23 Cal. App. 5th 289, 304.

Regarding whether a company suffers or permits an employee to work, the Curry court essentially repeated its analysis regarding whose responsibility it was to hire, fire and control employee’s daily tasks. Id.

Finally, the court went on to discuss whether Shell “engaged” the employee. Here, California relies on the common law test on whether a worker is an employee of an independent contractor, and the Curry court concluded that although both ARS and Shell provided the employee a place to work and her equipment, that is insufficient to establish joint employer liability. Id. at 308.

For more information, contact Madonna A. Herman (Of Counsel-San Francisco, CA) at 415.625.9248 or madonna.herman@wilsonelser.com.